CHANCELLOR George Osborne's hint of some reduction in North Sea oil taxation in his forthcoming budget is too little and too late ("Osborne urged to scrap oil tax grab", The Herald, March 4).

There is no doubt that, ever since the 1970s, successive UK governments and chancellors have seen North Sea oil as nothing other than a massive cash cow, seeking to milk it as much as possible by a variety of taxes and other impositions, while making no attempt to invest some proportion of the huge returns for future use.

The tax grab starts with the heavy premiums the oil companies have to pay the Government just to be licensed to explore and operate in British territorial waters. Then Petroleum Revenue Tax (PRT) is applied at 50 per cent to every barrel of oil pumped ashore. On top of that there is the Supplementary Charge, originally 20 per cent but increased to 32 per cent by Mr Osborne himself in 2011. And of course the oil companies also have to pay UK corporation tax on their profits earned within the United Kingdom, although PRT can be deducted in calculating that liability.

All of these charges are of course reflected in the wholesale price of petrol as delivered to our filling stations. But as a final grab, the greedy Government then charges every purchaser another 20 per cent tax for VAT, effectively making us pay tax on taxes. And then the Treasury pours all of that enormous tax bonanza into the one common pot within the Treasury, as if there was only one biscuit tin on the shelf. Every pound of annual current public expenditure is then paid out of that tin. Unlike Norway and almost every other country in the world with the temporary benefit of large oil reserves, Britain has not put away any of this colossal tax bonanza into a long-term capital fund.

In his excellent letter (March 4) John Scott Roy reminds us that Britain's original plan was to retain a direct stake in the production activities in the North Sea and the income derived from these, through the two publicly-owned oil companies BNOC and Britoil. But Mrs Thatcher's irrational hatred of any nationalised business meant that both were first emasculated and then closed during her reign. This was a gross error of judgment, as can be seen by comparison with Norway's Statoil company, set up for the same practical purposes and now a world-wide success.

In brief, the UK Government's involvement with North Sea oil has been both short-sighted and disastrous. It has sought only to maximise the immediate tax revenues, and failed to show any vision of how such a relatively temporary godsend could be used to benefit future generations and to build the nation's long-term infrastructure. As usual, our UK politicians have failed us, particularly the people of Scotland.

Iain AD Mann,

7 Kelvin Court, Glasgow.

MANY years ago when the price of oil fell and the price at the pumps took weeks before following suit, we asked why. The reply we got was that it took weeks, even months, for the cheaper fuel to reach the pumps via pipelines, ships, refineries and road tankers.

Then, when the price at the wells rose, the price at the pumps rose straight away - just like now! When we enquired why, we were told that stocks had to be replaced at the new cost!

The petrol companies have no better conscience that the energy companies and do as they please with the public.

Peter L Harrington,

Leabrae,

Cardross,

Dumbarton.